Government mulls over increasing the price of imported Fertiliser

Sunday, February 26th, 2012 5:52:15 by

Government mulls over increasing the price of imported Fertiliser

Saturday, February 25, 2012: The Finance Ministry and the Planning Commission are considering a rise in price of imported Fertiliser. The proposal is put forward in order to taper the gap between locally produced urea and that
imported from abroad.

According to commendable sources, Fertiliser dealers have bagged a super normal profit of about Rs14 billion because of the gap between two prices and the subsidy provided by the government. Imported urea is way much cheaper than
that produced locally. Pakistan has imported 0.5 million tons of urea in January.

Fertiliser industry representatives, during a meeting at the Ministry of Industries, held that growers were being misled by a group of people, who were repacking imported Fertilizers in local bags and selling them at higher prices
and bagging extra profit of about Rs490 to Rs500 per bag. No one in the meeting objected on this claim from the officials of Fertiliser industry.

The finance ministry’s joint secretary suggested that there should only be a price difference of Rs50 per bag between domestic and imported urea. A spokesperson of the Planning Commission also approved the proposal, saying the
sale price of imported urea should be increased.  However, the Food Security and Research Division opposed the proposal, saying it would raise urea prices.

The government of Pakistan is giving subsidy on imported fertilizers but growers are not receiving the whole profit. The government purchases urea at Rs3, 198 per bag, while the fertilizer dealers get it at Rs1, 300 per bag. However,
the dealers are selling the product to growers at a much higher rate of at Rs1, 800. The government suffers a loss of about $784 million due to the subsidy it provides to Fertilizers dealers.

Pakistan has tremendous capacity of producing urea (about 6.9 million tons according to estimates). However due to gas shortage – which is a crucial element in production – the country hasn’t been able to meet its requirement.
Urea production has gone down by two million tons due to gas shortfalls.

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